Unintended Consequences
Medicaid and the Affordable Care Act

While Obamacare has expanded healthcare coverage dramatically, it has also created some new difficulties.

Consider:  “June Cleaver” is a single parent of two boys- Wally and Theodore (“Beaver”).  She just became a real estate broker and made $25,000 in 2015.

JUNE’S HEALTHCARE OPTIONS FOR 2016

Medicaid.  The family’s projected income  for 2016 (based on 2015)  is below $27,724* and thus eligible for premium-free healthcare through Rhode Island.* However, Beaver is a behavioral nightmare and his singularly awesome therapist does not accept Medicaid payments; Dr Bigmun Loyd’s direct billing rate is $125/hour.  So June concludes she will need to purchase private health insurance to get these doctor bills covered.

Private Health Insurance:  June can purchase private health insurance on the Exchange; however, if she goes this route, because she’s otherwise Medicaid eligible, she won’t get a subsidy to bring down the cost of the premiums.** The full cost of the monthly premium is beyond the Cleavers’ reach. So at this point June’s only options are to go on Medicaid and take a chance on a new doctor, or sign up for premiums that are beyond her financial means.

Projecting Higher Income: June is self-employed in succeeding years and her income is hard to predict. She hopes 2016 will be more lucrative and, instead of using her 2015 earnings of $25,000, instead projects $55,000 in net earnings on her application. All family members will now be ineligible for Medicaid*. But June is eligible forsome upfront “premium assistance” in 2016; perhaps she can now afford the premiums and continue with the same doctor for Beaver.

What happens if June’s actual income in 2016  turns out to be closer to $25,000? When her 2016 tax return is prepared, the final premium subsidies will be based on this $25,000 ultimate income and she will recoup the subsidies lost when June was paying for health insurance based on her projected income of $55,000 (The tax system has not been designed to  screen for eligibility when computing the finalsubsidy — it’s solely income-based. However, some state exchanges require substantial changes of income to be reported during the year, and there is no guarantee they won’t take action if there is a continuing pattern of disparity between projected and actual income.)

Confused and overwhelmed? You are not alone; even health insurance brokers and workers at the exchanges have trouble sorting all this out.

*The Affordable Care Act dramatically expanded Medicaid eligibility and raised the income limits (which are based on Federal Poverty Guidelines for different family sizes). Rhode Island participates in the Medicaid expansion; the program is voluntary and some states have declined.  In Rhode Island, the upper limit for Medicaid coverage forminors in 2015 was $53,439 for a family of one adult and two children)

** The same would be true if June were eligible for  health care benefits through other government programs like Medicare or Tricare (for military).

CLASSIFIEDS DEPARTMENT!

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BECAUSE YOU ASKED

Thank you for the well-wishes for my “frozen shoulder” surgery, to remove “adhesive capsulitis”.  All was smooth and I should be returning to championship weightlifting in no time. As you can see, they successfully unstrapped me from the medieval torture rack they used to manipulate my shoulder after surgically removing the scar tissue.

Because you asked.  And by all means, keep asking,